Supply and demand in the oil market are close to matching up, the IEA said today, but rising US supply could mitigate landmark OPEC-led production cuts.

In the first quarter of 2017, "the oil market was almost balanced," the International Energy Agency said in its latest monthly report.

"It has taken some time for stocks to reflect lower supply when volumes produced before output cuts by OPEC and eleven non-OPEC countries took effect are still being absorbed by the market," the report said.

At the end of November, the Organization of Petroleum Exporting Countries (OPEC) agreed to cut output by 1.2 million barrels per day (mb/d) from January 1, initially for a period of six months.

Then in December, non-OPEC producers led by Russia agreed to cut their own output to 558,000 barrels per day.

The aim was to reduce a glut in global oil supply that had depressed prices.

The compliance rate with that agreement "has generally been strong," the IEA said.

But oil at above USD 50 a barrel has, in turn, attracted higher-cost producers in the United States back to the market, and frantic American drilling will push non-OPEC supply throughout the year, the IEA predicted.

"Of course, things will change elsewhere in the balance, and today the most closely watched data point on the supply side is US crude production," the IEA said.

In February, US crude output increased again and "in line with stronger recent performance from the US shale sector we have revised upwards our expectation throughout 2017," it said.

"Such is the diversity and dynamism of the US shale sector that our numbers are likely to be a moving target as 2017 progresses."

The overall outlook for the non-OPEC countries, eleven of which were voluntarily cutting production to support OPEC, pointed to faster growth than previously anticipated in 2017, the IEA said.

On Monday, Russia and Saudi Arabia called for extending the output cuts ahead of an OPEC meeting on May 25.

And on Tuesday, Kuwait said it "gives its full backing and support to ... Extend the oil output cuts deal between OPEC and other producers until March 2018."

Meanwhile on the demand side, the IEA left unchanged its estimates for the worldwide thirst for oil, with demand growth for 2017 expected to be 1.3 million barrels per day.

"Growth was weaker than expected in the first quarter, however, with notable downward revisions seen in the US -- where demand is essentially flat -- and in Germany, Turkey and India," the report said.

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